Honda and Nissan, once rivals, are talking about merging — and Nissan investors are thrilled

Core Viewpoint - Nissan and Honda are exploring a merger to enhance their competitiveness in the electric vehicle (EV) market, responding to challenges posed by Tesla and Chinese manufacturers [1][2][4]. Group 1: Merger Considerations - The potential merger aims to strengthen the existing ties between Nissan and Honda, allowing them to pool resources and increase their market power [1][2]. - Both companies have confirmed they are in negotiations regarding the merger, marking a significant shift from their previous rivalry [2][5]. Group 2: Market Reaction - Following the news of the merger discussions, Nissan's stock surged nearly 22% on Tuesday, although it later settled at an 11% gain after hours [3]. - In contrast, Honda's shares experienced a decline of approximately 1.3% after the merger news was confirmed [5]. Group 3: Context and Background - The merger talks come in the wake of Nissan's struggles with falling profits and a significant workforce reduction of 9,000 jobs globally in November [3]. - Earlier in the year, Honda and Nissan had already agreed to collaborate on EV batteries and software, indicating a move towards greater cooperation [4]. - Nissan's CEO, Makoto Uchida, acknowledged the need for partnerships to enhance competitiveness, highlighting the limitations of going it alone in the current market [5].